Microsoft Vista Sells 20M Copies in Feb.

Microsoft Corp. said Monday it sold 20 million consumer copies of the new
Windows Vista operating system worldwide in February, but analysts said the
data shed little light on the program's popularity during its first month on
the market.

By comparison, Windows XP, Vista's predecessor, sold 17 million copies in the
two months following its 2001 launch, Microsoft said.

"It's a stronger than expected start," Bill Mannion, a director of
product marketing for Windows, said in an interview.

But given that the personal computer market has nearly doubled since XP launched,
Vista sales "probably should be more," said Michael Silver, vice president
of research at Gartner, a technology research group.

The analyst said 51 million PCs were sold to consumers worldwide in 2002; this
year, the research group predicts 96 million consumers will buy a computer.

Starting in late October, PC makers included coupons for free or low-cost Vista
upgrades that could be used once the software became available at the end of
January. Microsoft's February sales total includes those promised upgrades,
in addition to licenses ordered by PC makers to install on new computers, shrink-wrapped
copies sold in retail stores and downloads from the Windows Marketplace Web
store.

Silver estimates PC makers sold between 12 million and 15 million PCs with
Windows XP Home Edition over the holidays -- a significant chunk of the 20 million
total, depending on how many included Vista coupons.

While Microsoft wouldn't say how many Vista upgrades were ordered in that time
frame, Dell Inc. spokesman Bob Kaufman said about two-thirds of its holiday
PC shoppers registered for the upgrade.

"That would say that those (Vista sales) numbers aren't all that great
if that includes all that backlog," said Silver.

Shipments of Vista to U.S. retailers in February lagged XP's first-month shipments
by about 56 percent, according to the NPD Group, which tracks retail software
sales.

Microsoft declined to break out the number of Vista copies sold at retail,
though it has said in the past that 80 percent of Windows revenue comes from
sales to PC makers.

The retail channel may not be the most important for Microsoft, but NPD analyst
Chris Swenson said the decline is an indicator of consumer behavior overall.

"That's kind of a big deal," Swenson said. "Our thesis was,
every review of Vista talks about how strenuous the hardware requirements of
Vista were. I think customers got the message."

The analyst also said he thought Microsoft's advertising strategy, which he
said was light on TV commercials, was partly to blame for the drop in retail
sales.

"Microsoft should have more TV ads selling Vista than Apple has criticizing
Vista," he said, referring to a popular series of Apple Inc. commercials
that, among other things, portray the Vista upgrade as a grave surgical procedure.

Shares of Microsoft rose 20 cents to close at $28.22 on the Nasdaq Stock Market.